Gwei to Ether Conversion – Ethereum Units Explained

Constantly having to covert Gwei to Ether for transaction/gas fees can be frustrating. The irony is that “gwei’ and all other ether units were created to rid user frustration and promote adoption. The intent was definitely well thought out - you can trust Vitalik & team with logical ideation. But perhaps we require a bit more insight on Ethereum’s units and its intent. It may just alleviate our frustration for all future transactions.

Let’s just say Ethereum’s core team took a history lesson from bitcoin before they brought forth all the Ether Unit monsters.

What is Gwei? And All Other Ether Units …

In order to grasp the concept of ‘gwei’, lets begin with something we’re all familiar with:

The money in our wallets!(or if you’re anything like me - the money in the deepest corner of your jeans pocket)

The money in our wallets, regardless of currency, likely also comes in denominations. But for the purpose of this explainer, lets focus on the US Dollar. 1 US Dollar has four denominations: Cents (1 cent), Nickles (5 cents), Dimes (10 cents), and Quarters (25 cents).

Like the US Dollar, Ether too has denominations.Remember, "Ether" is the currency used within the Ethereum Blockchain. Not ‘Eth’, Not ‘Ethereum’. .... "Ether"

Ether has three primary denominations, namely (lowest to highest):

Wei

Gwei

Finney

In essence, ‘Gwei’ is simply a denomination of Ether - So when converting Gwei to Ether’ for gas, remember that ‘Gwei’ is Ether - Just a fraction of it. Similar to a regular economy, there are many microtransactions taking place on the Ethereum Blockchain that require payments in fractions.

Just like how a vendor wouldn’t ask you to pay “1/10th of a dollar” for a plastic bag (let’s be realistic - that’s all you’ll get), the ethereum blockchain wouldn’t ask you pay "0.0000021 ether" for transaction fees. It’s just a difficult price to convey.

Instead, you’d be asked to pay 10 cents for the plastic bag, and 2100 gwei for transaction fees. Sounds much better, doesn’t it?

When dealing with currency, fractions are difficult to convey, tedious to convert, and aren’t very user friendly. Hence, the introduction of user friendly denominations, like Gwei.

Gwei to Ether and More - A Future-Proof Ethereum

When considering all three ether units: Wei, Gwei & Finney, you can’t help but wonder - ' why couldn’t Ethereum decide on one denomination? Gwei to ether and vice versa? 'Note: There are actually 10 different ether units, 3 wasn’t too bad a compromise.

It appears that Vitalik was looking to future proof Ethereum so that people could always have an open dialogue about ether in varying quantities regardless of ether price.

the goal of specifying suggestions for all of them was to have some schelling point on what to use for smaller denominations so that people could easily talk about varying quantities of ether regardless of whether the ETH price was $0.01, $10 or $100,000 - Vitalik Buterin

All suggested ethereum units were meant to be a schelling point (an anchor term like cents) depending on various use cases. For now, the three primary ether denominations were meant for the following ether:

Finney = for micropayments

Gwei = for gas prices

Wei = for discussion around APIs and other use cases

If ether’s value skyrockets like that of bitcoin, we’d likely see a rise in ‘finney’ in various ether uses and discussions.